Recently, our HOA Dispute Attorneys have been asked to analyze whether a waiver of rights conferred upon an individual pursuant to Cal. Civ. Code § 5655(a) is valid if the waiver was part of a HOA assessment repayment plan agreed to by a homeowner behind on HOA dues. Cal. Civ. Code §5655(a) expressly provides that “any payments toward that debt shall first be applied to the assessments owed, and only after the principal owed is paid in full shall the payments be applied to interest or collection expenses.” Thus, 1367(a) instructs an HOA on how a delinquent payment must be applied.
Often times, HOAs and their collection agents request and/or insist that a homeowner behind on HOA dues, waive his/her rights under 5655(a) so that the HOA may apply late payments any way they choose, including deferring payments toward principal owed and instead paying down attorney fees, collection costs and other “non-principal” amounts accrued.
The question then becomes whether a homeowner, behind on payments, may waive his/her rights under 1367(a). Cal. Civ. Code § 3513 allows for an individual to waive the advantage of a law intended solely for his benefit but a law established for a public reasons cannot be waived. A homeowner’s rights conferred under 1367(a) could presumably be waived since it is not established for a public reason. The next question then becomes, what makes a waiver effective.
Under California law, “Waiver of a right conferred by law must be voluntary, knowing and done with adequate awareness of the relevant circumstances and likely consequences. A waiver is not effective unless the party executing it is fully informed of: (1) the existence of the right being waived; (2) the meaning of the waiver; (3) the effect of the waiver; and (4) a full understanding of the explanation of the waiver. The burden is on the party claiming a waiver to prove it by clear and convincing evidence. Doubtful cases will be decided against the existence of waiver, especially when the right alleged to be waived is one that is favored by law.” See Andrew Smith Co. v. Paul’s Pak, Inc., 754 F. Supp. 2d 1120, 1131 (N.D. Cal. 2010.) See also Record v. Indemnity Ins. Co. of North America, (1951) 103 Cal. App. 2d 434, 445 (“primary essentials of a waiver are knowledge and intent. Before one may be deemed to have waived a right granted by statute he must be shown to have knowledge of the right and an intent to waive or forgo it.”)
Thus, under California law, before a waiver of rights is deemed effective, the person waiving his/her right must have knowledge of the right waived and intent to waive said right and the party seeking to enforce the waiver carries the burden to prove an effective waiver.
If you have a question regarding the effectiveness of a contractual waiver, or a related litigation question, contact our Los Angeles Litigation Attorneys for a free consultation and case evaluation.